Barclays 2014 Annual Report Download - page 134

132 I Barclays PLC Annual Report 2014 barclays.com/annualreport
Risk review
Risk management
Funding and capital risk management
Funding risk
The ability of the Group to achieve its business plans
may be adversely impacted if it does not effectively
manage its capital (including leverage) and liquidity
ratios. Group Treasury manage funding risk on
a day-to-day basis with the Group Treasury Committee
acting as the principle management body.
In 2014, to ensure effective oversight and segregation of duties and in
line with the ERMF, the Key Risk Officer duties and conformance
responsibilities were transferred from Treasury to Risk.
An overview on how capital and liquidity risks are managed is covered
below:
Board Financial Risk Committee
Group Treasury Committee
■ Chaired by the Group Treasurer
■ Oversees the manangement of the Group’s Capital Plan
■ Sets policy/controls for liquidity, maturity transformation and structural interest rate exposure
■ Monitors the Group’s liquidity and interest rate maturity mismatch
■ Monitors usage of regulatory and economic capital
Capital risk
Capital risk is the risk that the Group has insufficient
capital resources to:
QMeet minimum regulatory requirements in the UK
and in other jurisdictions such as the United States
and South Africa where regulated activities are
undertaken. The Group’s authority to operate as
a bank is dependent upon the maintenance of
adequate capital resources;
QSupport its credit rating. A weaker credit rating would
increase the Group’s cost of funds; and
QSupport its growth and strategic options.
Overview
Organisation and structure
Capital management is integral to the Group’s approach to financial
stability and sustainability management and is therefore embedded in
the way businesses and legal entities operate. Capital demand and
supply is actively managed on a centralised basis, at a business level, at
a local entity level and on a regional basis taking into account the
regulatory, economic and commercial environment in which Barclays
operates.
Roles and responsibilities
The Group’s capital management strategy is driven by the strategic
aims of the Group and the risk appetite set by the Board. The Group’s
objectives are achieved through well embedded capital management
practices:
Capital planning
Capital forecasts are managed on a top-down and bottom-up analysis
through both short term (one year) and medium-term (three years)
financial planning cycles. Barclays’ capital plans are developed with the
objective of maintaining capital that is adequate in quantity and quality
to support the Group’s risk profile, regulatory and business needs,
including Transform financial commitments. As a result, the Group
holds a diversified capital base that provides strong loss absorbing
capacity and optimised returns.
Barclays’ capital plans are continually monitored against relevant
internal target capital ratios to ensure they remain appropriate, and
consider risks to the plan including possible future regulatory changes.
Local management ensures compliance with an entity’s minimum
regulatory capital requirements by reporting to local Asset and Liability
Committees with oversight by the Group’s Treasury Committee, as
required.